Danes make welfare a hot election issue as cracks show in Nordic model

92-year old Aase Blytsoe, who has dementia, sits in her apartment in Aarup, Denmark, May 28, 2019. REUTERS/Fabian Bimmer

By Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) – The Nordic welfare model, long the envy of many across the world seeking an egalitarian utopia, is creaking.

Aging populations have led to politicians across the region chipping away at the generous cradle-to-grave welfare state for years. In Denmark, next week’s election could prove a turning point as frustrated voters say: No more.

Danes, like citizens of other Nordic nations, have largely been happy to shell out some of the highest taxes in the world, seeing them as a price worth paying for universal healthcare, education and elderly services.

However, spending cuts by successive governments to reduce the public deficit have led to more people paying out of their own pockets for what used to be free.

“We pay very high taxes in Denmark, and that’s alright. But in return, I think we can demand a certain service,” said pensioner Sonja Blytsoe.

Her 92-year old mother, who has dementia, was told by her local council in the central Danish town of Assens that the cleaning of her small apartment at a nursing home would be almost halved to 10 times a year.

Her mother, who lives off her state pension of 9,000 Danish crowns ($1,350) per month, could not afford to pay the roughly 1,000 crowns a month for a private cleaning firm, Blytsoe said.

In an illustration of the simmering public anger at such cuts, the council’s move sparked an outcry on social media that prompted the prime minister to comment on the case in parliament and the decision to be reversed.

The erosion of the welfare state has now become a defining issue in the June 5 general election in a country where people hand over an average 36% of their personal income to the state each month.

Opinion polls indicate Prime Minister Lars Lokke Rasmussen of the Liberal Party will lose power to Mette Frederiksen of the center-left Social Democratic Party.

Frederiksen’s Social Democrats have won popular support by pledging to increase public spending, making businesses and the wealthy pay more toward welfare services through higher taxes, and to partially roll back some recent pension reforms by allowing people who have worked 40 years to retire earlier.

However Rasmussen has accused his rival of being in “the business of selling dreams”.

“Either you’ll leave voters massively disappointed, or leave an enormous hole in the treasury,” he told Frederiksen about her pension plans during a TV debate earlier this year.


The Nordic model has been held up as the gold standard for welfare by many left-leaning politicians and activists globally.

It featured in the last U.S. presidential election campaign, for example, when Democratic candidate Bernie Sanders pointed to Denmark as a model for his vision of an ideal American future.

However the tough choices confronting Denmark are reflected across Nordic nations faced with a generation of baby-boomers creeping into retirement. Voters feeling a rising sense of insecurity are increasingly pressuring politicians to safeguard their cherished welfare model.

In Finland, the Social Democrats came out on top in an April election, for the first time in 20 years, after campaigning on tax hikes to meet the rising costs of welfare.

In Sweden, one of Europe’s richest countries, support for the nationalist Sweden Democrats surged in last year’s election on the back of fears over immigration and welfare.

Nordic countries still top other high-spending OECD countries like the United States, Germany and Japan for public spending per capita on social benefits targeted at the poor, the elder, disabled, sick or unemployed.

Denmark itself spends a higher proportion of its wealth on public welfare than most European countries, at 28% of GDP, behind only France, Belgium and Finland.

But many Danes are distressed at the way things are going following two decades of economic reforms.

Cuts to healthcare services, which include everything from free doctor appointments to cancer treatment, have led to the closure of a quarter of state hospitals in the past decade alone.

A recent survey showed that more than half of Danes don’t trust the public health service to offer the right treatment. As a consequence the proportion of the 5.7 million Danish population taking out private health insurance has jumped to 33% from 4% in 2003, according to trade organization Insurance & Pension Denmark.

Other cuts over the past 10 years have led to the closure of a fifth of state schools, while spending per person above 65 years on services such as care homes, cleaning and rehabilitation after illness has dropped by a quarter.

Since the early 2000s, governments have also pushed through unpopular measures to encourage people to work longer.

They include gradually increasing the retirement age to 73 – the highest in the world – in decades to come from 65 currently, phasing out early retirement benefits and cutting unemployment benefits to two years from four.

Click here for interactive graphics illustrating the pressures on the welfare model: https://tmsnrt.rs/2LYT6ME


While the policies have generated economic growth averaging 1.6% since 2010 – above the EU average – and sound public finances, the election could mark a change of direction.

Frederiksen says she will increase public spending by 0.8% per year over the next five years – the equivalent of 37 billion Danish crowns in 2025 – to buttress welfare.

“The reason you can’t agree to spend the money needed to keep the current (welfare) level is that you want to set aside money for tax cuts,” she told Rasmussen during the TV debate.

Frederiksen is however bound by a 2012 law not to allow a public deficit of more than 0.5% of GDP, much stricter than EU rules setting the ceiling at 3%.

Her message about increased spending is nonetheless going down well with the public, along with a tougher stance on immigration which has also helped her win voters from the anti-immigration Danish People’s Party.

Rasmussen has argued that an acceptable level of welfare can be achieved in part by technological advances and letting more private players into areas like health and elderly care.

But this month, in a change of tack to address voters’ concerns, he announced a new plan to raise public spending by 0.65% a year – almost the same rate as the Social Democrats.


With government debt at 49% of GDP, way below the OECD average of 111%, and a budget close to being balanced, there is room to raise welfare spending, according to economists.

However Jan Stoerup Nielsen at Nordea said certain election promises, such as those by both candidates to come up with 1,000-2,000 new nurses, were unrealistic at a time of record high employment of 2.77 million, or 97% of those able to work.

“The problem is that there’s not enough people,” he added. “There is not much politicians can do at the moment. You can say you want a thousand new nurses in the hospitals, but they are nowhere to be found,” he added.

He warned more public spending risked overheating the economy and hurting growth down the line if more people shifted from the private to public sector.

Pensioner Blytsoe said that when her mother’s services were curbed, she did her best to tidy up the apartment when she visited, but refused to do the regular cleaning previously offered by the state.

“If I did that, the municipality would’ve achieved their goal to cut costs and make us fill the gap.”

(Reporting by Jacob Gronholt-Pedersen; Editing by Pravin Char)

Aging Japan: Unclaimed burial urns pile up in Japan amid fraying social ties

By Kaori Kaneko

YOKOSUKA, Japan (Reuters) – Unclaimed urns containing ashes of the dead are piling up by the thousands across Japan, creating storage headaches and reflecting fraying family ties and economic pressures in a rapidly aging nation.

The identities of the dead, cremated at public expense, are usually known. But in most cases, relatives either refuse or don’t respond to requests to collect their remains. Burials can be costly and time-consuming, a burden on family members who may hardly know the deceased relative.

“When I die, though I have only 150,000 yen ($1,340), will you cremate me and put me in a pauper’s grave? I have no one to collect my remains,” said a note left by a man in his 70s in Yokosuka, south of Tokyo, who died in 2015 and whose urn was later buried at a local temple.

The abandoned remains highlight social, economic and demographic changes in Japan, where more elderly live on welfare and families are more scattered, weakening traditional family bonds and obligations.

It is a problem that is likely to grow, experts say; deaths in Japan are projected to rise from 1.33 million a year to 1.67 million by 2040, even as the overall population drops.

Yokosuka was so overwhelmed with unclaimed urns that it ran out of space in a 300-year-old charnel house that was about to collapse. It combined ashes of different people into a much smaller number of urns that it now stores in a hillside cave, with about 50 newer urns accumulating at the city office.

“Space to store them is running out,” said Hitomi Nakamura, an official in Saitama city, north of Tokyo, where the number of unclaimed urns has grown sharply the last few years to more than 1,700.

“Many elderly people are living on welfare,” he added, “and many of them may be estranged from their families.”

With Japanese wages barely growing, and many children of the elderly living on pensions themselves, managing death costs, including arranging for their burial, can be a burden.

A traditional funeral, including food, drinks and gifts for guests, and hiring a Buddhist monk to chant sutras, can cost 2 million yen ($17,800) or more, industry sources say.

New businesses have sprung up offering no-frills funerals for $2,000 to $4,000, but other costs can add up, including the hundreds of dollars it may cost to bury the urn at a temple or cemetery.


There are more elderly poor than in years past, some of whom cannot afford their own funerals. Nearly 3 percent of elderly were on welfare in 2015, almost double the rate two decades earlier, government statistics show. Just over half of all Japanese on welfare are 65 or older.

“There are more people who die alone, with no one to look after cremated remains because of weaker family relationships,” said Hisako Makimura, a visiting professor of sociology at Kansai University.

In decades past, it was not uncommon for three generations of family to live together. But experts say that as Japan’s economy has changed, couples have fewer children, and people tend to move farther from home for work, among other factors.

Nearly 6,000 urns have accumulated in the southern city of Fukuoka, while Osaka, in western Japan, buried the remains of 2,366 people in a communal grave this year after no one claimed them after one or two years.

The number of Japanese age 65 and older will swell from 28 percent of the population to 36 percent by 2040, according to the government-backed National Institute of Population and Social Security Research.

“Families and communities used to play roles of taking care of deceased people,” Makimura said. “But the burden on local governments will likely grow as their involvement in dealing with the dead increases.”

(Click for graphic on Japan’s aging population: http://tmsnrt.rs/2HKy1i7)


In Yokosuka, more elderly are dying without leaving funeral instructions or information about relatives.

City officials comb through their homes and census registries, and try to contact family members through the mail, often to no avail.

“The dead are ordinary citizens. It could happen to anyone,” said Kazuyuki Kitami, a city official. “These bones are warning those of us who are alive that we are poorly prepared.”

Noticing that many unclaimed remains were from poor elderly people, Yokosuka in 2015 started an “ending plan support” service for low-income residents with no immediate family members.

Individuals pay at least a fifth of the 250,000 yen cremation and burial costs, with the government covering the rest. Dozens have signed up, and in May the city made similar services available to anyone.

Sumitaka Haraguchi sits on a bed in a room of a nursing home where he lives during an interview with Reuters in Yokosuka, Japan September 11, 2018. REUTERS/Kim Kyung-Hoon

“I feel so relieved,” said Sumitaka Horiguchi, 80, after signing up for the service and ensuring he will be buried at a local temple.

Horiguchi never married and hasn’t seen his three step-siblings in many years, so he worried what would happen to his remains when he died.

“My days have changed,” he said from his nursing home. “I feel calm.”

(Corrects spelling of man’s name in 23rd and 24th paragraphs to “Horiguchi” not “Haraguchi”.)

(Reporting by Kaori Kaneko, Kim Kyung-Hoon and Kwiyeon Ha; Editing by Malcolm Foster and Gerry Doyle)

Checks for free: a Mexican plan to combat poverty

Checks for free: a Mexican plan to combat poverty

By Anthony Esposito

MEXICO CITY (Reuters) – An opposition alliance in Mexico wants to launch a universal basic wage to combat the poverty that blights the lives of almost half the population, touting an experimental reform discussed globally as a solution to job losses from automation.

The center-right National Action Party and center-left Party of the Democratic Revolution are running on a joint ticket with the leftist Citizens Movement (MC) for next July’s presidential election, and the income plan is a key part of their manifesto.

Officials inside the alliance say details of the plan are still being worked out, though its contours are emerging.

A basic income of 10,000 pesos ($537) per year for everyone, including children, could be provided by consolidating funds from federal, state and municipal welfare programs, Jorge Alvarez, an MC congressman working on the plan told Reuters in a recent interview.

“If you multiply that by four or five, which is the typical size of a Mexican family, you get an annual income of 40,000 to 50,000 pesos per family, Alvarez said, adding that providing the income to children could be conditional on school enrollment.

Home to the richest man in Latin America, Carlos Slim, Mexico is laden with oil and minerals, boasts a large manufacturing base and has the world’s 15th biggest economy. But poverty has remained stubbornly stuck above 40 percent of the population for decades.

Government social development agency Coneval defines poverty as a person living on no more than 2,925 pesos a month in cities and 1,892 pesos in rural areas. The agency also takes into account other factors like healthcare and education.

Getting to 40,000 or 50,000 pesos per family could be achieved “without increasing taxes,” Alvarez said.

Still, the Organization for Economic Cooperation and Development argues that providing an unconditional basic income to everyone of working age would do little to combat poverty if not funded by extra taxes.

The idea of universal basic income has gained currency due to the increasing robotization of the workforce. Finland is running a pilot project to test whether unconditional payments could serve as a plausible alternative welfare model.

Mexico has seen job growth in recent years thanks to a manufacturing boom, and could face a smaller workforce as robots take over more tasks.

Swiss voters rejected a basic income plan in a referendum last year, while the defeated Socialist candidate in France’s presidential election this year, Benoit Hamon, championed it, saying it would be funded by a tax on robots that replace human labor.

Mexican gross domestic product was worth $1.046 trillion in 2016, according to the World Bank, but some 53.4 million Mexicans, or 43.6 percent of the population, live below the poverty line, according to Coneval.

($1 = 18.6239 Mexican pesos)

(Editing by Dave Graham and Jonathan Oatis)

Swedish commission proposes cap on profits in welfare

A general view shows Stockholm January 17,

STOCKHOLM (Reuters) – Sweden should impose a profit cap on private schools, hospitals and care homes funded by taxpayer cash, freeing up more money for investment to improve services, a government-appointed commission said on Tuesday.

Sweden was a trailblazer of deregulation in the health and education sector in 1990s, but many Swedes are now worried that public services have deteriorated while taxpayers are directly funding shareholder payouts by businesses.

“I do not think we should waste taxes in this way,” the head of the commission, Social Democrat politician Ilmar Reepalu, told reporters.

Sweden has slumped in international education rankings while reports of neglect in care homes and fat profits for companies offering housing to asylum seekers have prompted the center-left government to pledge to roll back some market-oriented reforms.

Government attempts to reform Sweden’s welfare sector will be eagerly watched by countries, such as Britain, which have followed a similar path in outsourcing some public services.

The commission recommended firms operating in the welfare sector be licensed and have a ceiling on profits, increasing the amount they would then invest in their businesses.

“I cannot believe that anyone would complain if more resources go to schools and tax money produces better school results,” Reepalu said. “Who would say no to 5,000 or 6,000 more employees who should reduce the pressures in care homes for the elderly?”

In 2014, Swedish regions and municipalities bought services for almost 120 billion Swedish crowns ($13.3 billion) from private welfare companies.

The proposed cap – on operating profit in relation to working capital of 7 percentage points plus the risk-free rate – would mainly hit private equity companies, Reepalu said. “It could well mean that a number of those private equity firms that operate in this sector … switch to other sectors.”

Profitability in tax-funded welfare firms was double that in the services sector in general, according to the report.

But the minority coalition may struggle to introduce a cap, despite widespread public support.

“A profit cap, whatever the level, means the incentive for entrepreneurs to invest money, time and creativity will disappear,” Marcus Stromberg head of school firm AcadeMedia, partly owned by private equity fund EQT V, said.

Annie Loof, head of the Center Party that is part of the center-right opposition, said the report should be “thrown in the waste basket.” Experts have also said a cap could break EU law.

Japan revamps child welfare, tens of thousands still institutionalized

Children are seen through a window as they play at Futaba Baby Home in Tokyo

By Chang-Ran Kim

TOKYO (Reuters) – A baby lies in a metal-bar cot drinking from a bottle perched on his pillow in a Tokyo orphanage. There’s no one to hold and feed him or offer words of comfort.

The director of the institution, nurses scurrying busily around him, says he would like extra time and staff to pay more attention to the 70 babies and toddlers under his care, but it’s not going to happen.

“I wish we could hold them in our arms, one by one,” says Yoshio Imada. “Some people call this abuse. It’s a difficult situation.”

Japan last month passed a bill overhauling its 70-year-old Child Welfare Law, recognizing a child’s right to grow up in a family setting. It is short on specific, immediate measures, but experts say it’s a first step to making institutions a last resort, rather than the default position.

A staggering 85 percent of the 40,000 children who can’t live with their parents in Japan are institutionalized, by far the highest ratio among rich countries and prompting repeated warnings from the United Nations. Even with the revised law, Japan’s goal isn’t lofty: family-based care for a third of those children by 2029.

The statistics raise the question: where can foster parents be found for tens of thousands of children in need?

“We do the best we can but it’s obvious that a one-on-one relationship that foster parents provide is better,” says Kazumitsu Tsuru, who heads another infant institution in Tokyo.

“All children need someone who is dedicated only to them.”

A major hindrance is a lack of awareness about the fostering system – there are just 10,200 registered foster families, while adoptions are even rarer, at 544 last year. And in a society that treasures uniformity and blood ties, fostered or adopted children are often stigmatized.

A rise in reports of child abuse has also proved a stumbling block. Welfare workers are too busy taking children out of immediate harm. Placing them in institutions is faster than finding a foster family.

Too busy with the next victim, welfare workers also have little time to follow up with those children, leaving them to languish for years.


One foster mother knows all too well how harmful institutionalization can be.

Now 16, her foster son lulls himself to sleep by pounding his head against his pillow for several minutes. It’s a habit he picked up as an attention-starved child growing up in institutions until he turned six. He is a charming boy, his foster mother says, but erratic.

“When I call him out on something he does wrong, he lashes out at me as if he can do whatever he wants,” she says.

“He’ll do hateful things and at other times he’ll say, ‘Mummy, I love you,’ in a childish voice that’s not normal for a teenage boy. The emotional ups-and-downs wear you out.”

Another mother describes a child she took in from an institution at age five, just when he was beginning to realize he had no family. He flew into fits of rage at school and was afraid to leave the house. Needing to test his new family’s affection, he would ask: “Mummy, what would you do if I died?” At other times, he would beg to be fed milk out of a bottle in his foster mother’s lap.

The warehousing of Japan’s most vulnerable highlights the paradox in a country struggling with a stalled birthrate and ballooning social welfare costs as the population ages. Experts say institutionalization costs three times as much as fostering, and that Japan’s tight job market would be better-served by shifting those caregivers to daycare services to allow more women to work.

“I think the role of infant institutions will change,” says Tsuru, adding that, as the primary caregivers, institutions like his could help find babies a match in a foster or adoptive home.

“None of us wants to see a child stay longer here than they need to be.”

(Editing by Nick Macfie)